U.S. to Buy Almost All 15-Minute Tests Abbott Produces This Year

(Bloomberg) — The U.S. government will acquire almost all of the 15-minute Covid tests Abbott Laboratories plans to produce this year after the company was granted emergency approval for use of the test, according to people familiar with the deal.

Under the agreement, the government will pay $750 million for 150 million tests, the people said, asking not to be identified because the deal isn’t yet formally announced. Approval for the test came on Wednesday, and analysts quickly agreed the new assay — which works without relying on laboratory equipment — could help ease delays that have crimped much of the nation’s testing capacity.

The deal, reported earlier by Politico, will be formally announced by President Donald Trump, who is set Thursday to give his acceptance speech during the Republican convention. The company’s shares climbed 9% to $112.59 at 1:25 p.m. in New York trading.

The Trump administration has been criticized for failing to institute a coordinated testing approach for the U.S. to track the outbreak. Now, it plans to purchase almost all of the coming supply of a breakthrough product that can be used broadly and promises to deliver results on a mass scale no matter where it’s given.

Unlike other tests for the virus, Abbott’s BinaxNOW is entirely self-contained and doesn’t need any other equipment to get results, meaning large volumes can be done simultaneously.

Abbott has said it will produce 50 million of the new tests a month starting in October. It expects to have “tens of millions” of tests for September, said Andrea Wainer, the executive vice president for the Rapid & Molecular Diagnostics unit at Abbott.

“This is a major development that will help our country to remain open, get Americans back to work, and kids back to school,” said Alyssa Farah, the White House communications director. “The Trump Administration is proud to partner with Abbott labs to make this purchase possible to help the American people.”

Initial Round

It’s not entirely clear who will receive the initial round of tests. An administration official said they will go first to nursing homes, schools and other high-risk populations, but details were scant. Demand is expected to be high, as they could help guarantee the safety of everything from flights to restaurants to offices.

BinaxNOW uses a nasal swab and a small reactive card, and it can be administered by a range of health-care workers, including pharmacists, at almost any location. Abbott will start shipping the test within two weeks, it said.

Demand for an antigen test “could be ENORMOUS -– think about employers, restaurants, games/events, transportation etc. using these tests for ensuring safety,” Vijay Kumar, an analyst at Evercore ISI, wrote in a note to clients.

“This test approval represents a key requirement for society to ultimately return to a sense of normalcy,” said Robbie Marcus, an analyst at JPMorgan, in a note. He forecast Covid-19 related testing may generate $2.7 billion to $2.8 billion of revenue for the year, “a sizable tailwind for a company already better exposed to the virus than many in our coverage.”

The test uses so-called lateral flow technology, similar to the method used in at-home pregnancy tests. Essentially, these tests run a liquid sample along the surface of a pad with reactive molecules to show a result. While a pregnancy test is designed to detect a hormone, Abbott’s BinaxNOW looks for an antigen, a tiny portion of the coronavirus protein that’s collected from inside the nose.

“It’s detecting them at a critical point in the infection cycle, when they are at the highest risk of spreading disease,” said John Hackett, divisional vice president of applied research and technology at Abbott Diagnostics. “This will be a powerful tool in preventing the transmission of the virus and helping us return to normal life.”

While several other companies are selling antigen tests that also work quickly, they require some equipment to get the results. The technology also sometimes yields lower accuracy in exchange for working faster.

The BinaxNOW is 97.1% sensitive, meaning it correctly diagnoses those with coronavirus that often, and 98.5% specific, meaning an infection is correctly ruled out that often.

At the same time, Abbott is launching a mobile app called Navica that will be connected to the test, giving users an electronic record of their coronavirus status. The results could be used much like a boarding pass to allow those who are negative to return to everyday activities.